Sunday, June 25, 2017

Stealth Wealth Redistribution

Despite the litany of supply-side failures to create more and better jobs – most recently Kansas GOP Governor Sam Brownback’s decimation of state services without moving the employment needle through his “cut taxes” for the “job creators” tactic – and notwithstanding the worst economic inequality in this nation’s history, wealth redistribution is the Republican Party’s central plank.

The United States used to be in the green income distribution areas (considered reasonable) that the rest of the developed democratic world maintains as reflected in the above chart. But as American upward mobility has all-but-died in recent years, the United States is sliding into pink-to-red “banana republic” income inequality statistical realties (a lot more for the richest in society and a lot less for everyone else). This chart applies the “Gini Index” (named for an Italian social statistician) to measure such wealth polarization. “TheGini coefficient(sometimes expressed as aGini ratioor anormalizedGini index) (/dʒini/jee-nee) is ameasure of statistical dispersionintended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measure of inequality.” Wikipedia.

GOP policies are very intentionally focused on enhancing the wealthy, even if that has a deeply negative impact on the rest of us. Their problem? How to make that look as if they were creating a program that is fair to everyone… when it just plain isn’t. For Republicans, just about everything is couched as either “we can’t afford it” (“it “almost always applied to social and regulatory programs, not stuff they want like “defense”) or that disproven mantra, “we need to incent the job creators.” OK, let’s drill down further into what’s really happening.

Regulations that protect consumers and rein in banks’ squeezing us all, that promote occupational safety or protect our air and water quality cost wealthy corporations with compliance costs but benefit most of us. So damn us “little guys.” Repeal or limit those regulations and make such companies more profitable. Will they create more, good-paying jobs as a result?

Well, for example, they certainly disincentivize companies that manufacture equipment to provide alternative energy or environmental controls – a vastly larger industry than the dying coal business. And companies don’t just hire more people when they make more money. They need a clear business projection showing that there is a clear business opportunity to hire more people… which is not driven by their tax policies. As we learned during the Reagan era, when tax rates for companies plummet, they tend to use a great deal of that windfall capital for mergers and acquisitions… and most of us know that when two corporations combine, they move to justify that combination – with increased efficiencies and profitability – and almost always implement significant layoffs. Job loss.

You really have to wonder, if job retention and creation is the Trump administration goal, why have they so totally focused on a dying industry like coal mining (which employs under 100,000 workers, half the number of those employed in the solar energy sector), while the fading retail sector – which employs 10% of the American workforce (around 15 million) – is falling like a stone with massive job losses. OK, then, let’s just cut taxes.

While we do not yet have a fully-fleshed out revision of the federal tax code, Treasury Secretary Steve Mnuchin has already flashed a general perception of fewer tax-rate tiers that push over 90% of the tax cuts to the wealthiest 5%, some estimating that the top 500 earners stand to get annual tax savings in seven or eight figures each. We could lose $10 trillion or more over ten years under such “reform,” and guess where that money is coming from?

We’re not cutting the defense budget (we’re raising it). We can’t cut the interest cost associated with our deficit; we just owe that. We’ve already postponed any promised infrastructure upgrade. Clearly, with that massive a reduction in gross tax revenues, something has to give. Regulatory agencies, educational support, scientific research, healthcare, Social Security, social safety nets and social services to the public in general are the sacrificial lambs. As my June 18thblog –Shhhhhhhhhhhhh!– states, when it comes to implementing a massive tax cut while appeasing conservatives’ desire to contain the federate deficit, you cannot have both a solid healthcare planandthose tax cuts… so healthcare has to get cut to the bone to “incent the job creators.” It is truly an “either/or” choice.

The President has announced that Obamacare is over, that it has been a total failure. While clearly in need of a couple of fixes (like every major such program in American history), why did a program that was stabilizing, that was actually working, seem suddenly to crack at the seams, a crack that only developed after the Trump administration took control? My June 10thblog –Sabotaging the Affordable Healthcare Act (Obamacare)– shows how the Trump administration has been implementing a deliberate policy of underfunding and failing to enforce the ACA mandates, purposely disincentivizing insurance carriers to remain in the system by sending destabilizing mixed messages. Ahhhh. If you can kill Obamacare, regardless of the tactics (Trump’s base just overlooks this little meddling), then Congress will have no choice but to “repeal and replace.” Got it.

But wait. Every once and a while, this move to shift wealth further to those “job creators” (where exactly are those resulting jobs again?) surfaces as a hard slam to the vast majority of Americans: Those same hard-working Americans (around 70%) who have faced two and half decades of constant, year-to-year reductions in inflation-adjusted earning power. And sometimes the “favor the wealthy over most of us” becomes so obvious that it actually threatens the electability of those Republicans actively moving to take away benefits to their constituents, even from Trump’slegendary and seemingly immovably-loyal base.

But what Republicans aren’t openly discussing is how Trump’s populist healthcare campaign promises are completely incompatible with their lean government, incenting the rich, central platform – what some might call irreconcilable differences. “All together [looking at the GOP-Congress’ take on healthcare reform], it shows how long-term conservative goals of cutting taxes and entitlement spending have overtaken Trump’s agenda, as the bill faces critical votes in the Senate as soon as next week [week starting 6/26] that could take it to the precipice of becoming law. Reducing taxes, Republicans argue, will boost the economy, and shrinking spending on programs such as Medicaid will slow the growth of the federal debt.” Washington Post, June 23rd.

That the acceleration of America into nascent “banana republic” status in global income inequality measurements (see above), that trickle down (supply side/incent the job creators) economics has never really worked here… well we will just repeat those mantras enough until we finally make them true… Riiiiight!

But they cannot reverse the fact that what they are proposing is hardly a fulfillment of affordable, accessible and quality healthcare that Trump promised. It is very much the opposite. That nasty non-partisan Congressional Budget Office keeps reporting how the “repeal and replace” American Health Care Act (combined with the Senate’s Better Care Reconciliation Act of 2017) will save companies and the wealthy a ton of money, while slashing tens of millions of people from healthcare coverage, reducing what is covered under Trumpcare policies and threatening massively to increase deductibles and co-pays even for those who would be paying for coverage under the new plan, a plan that accelerates de facto reductions in coverage over time.

Hospitals, doctors and insurance carriers are screaming at the expected and massive negative social and economic consequences if Trumpcare passes and the ACA is extinguished. Few in the GOP are listening. The resulting disruption and suffering will be “uuuuge.” In the words of even Donald Trump himself, the impact of this legislation, if it passes, is just plain “mean.” God help you if you are getting older, have pre-existing conditions or, heaven forbid, are poor. Oh, and GOP leaders have also announced that Social Security and Medicare are “unaffordable” as configured. Hmmmm.

So as healthcare reform now sits in an unfortunate and clearly “rich win, middle and lower classes lose big” reconciliation bill (cited above) that was drafted in secret (now released, it’s a tough read, but scary when you understand what it really says), now approaching a Senate vote… super conservatives want more “repeal” and less “replace” while moderate Republicans fear the backlash when their constituents realize that they have been sold down the river with massive reductions in their current healthcare coverage. And because it is a “reconciliation” bill, they are not vulnerable to a “filibuster” (cloture) by Senate Democrats. Anything that happens in healthcare now is clearly going to be attributed solely to the Republicans, good or bad.

Unless they are prepared to violate one of their cardinal rules – don’t incur massive deficits – the GOP-controlled Senate has to pass a hugely reduced healthcare plan, cut social programs in general, in order to get to what the GOP really wants: massive tax cuts for the rich. But they seem to be unable to hide the fact that this bill is a huge slap-down to middle and working class Americans, and most certainly for the lowest income Americans. So bad that it actually is life-threatening to many. If their plan passes and really does hit those voters the hardest, the GOP secretly fears the potential negative ripple effect in upcoming elections.

What if Senate Majority Leader, Mitch McConnell (his Kentucky constituents would be hit hard by Trumpcare), secretly doesn’t want Trumpcare to pass? He currently does not have enough votes. But what if he wants it look like he tried but does not want Republicans to be held accountable for legislation that seems certain to backfire if passed? What if he wants to continue the existing ACA in some form in order to keep the liberals that passed it as “blame them” targets?

“Mr. McConnell plays his strategic cards so close to the vest that a queen of hearts must be tattooed on his tie. He may, of course, be convinced that the Senate can pass this bill. Perhaps after some moaning, and some changes to the bill through amendments, the 51 senators needed to get the bill over the line (or 50 if Vice President Mike Pence is summoned) will choose a good-enough effort over being tarred as the person who declined to make good on a seven-year promise to unravel President Barack Obama’s signature domestic policy achievement…

“When it comes to voting yes, a majority of members of Congress have a policy price, and leaders often will write the check. “There’s the natural frustrations that people have” at the start of a process that often ends in legislative victory, said Senator Bob Corker, Republican of Tennessee.

“But there are potential costs for senators like Mr. Heller and others in repealing a law that has grown in popularity over recent years, and Mr. McConnell has always taken pride in protecting his members. Trying to come to a meeting of the minds with the House — which crafted a far more conservative bill in many respects — would be time-consuming and unpleasant.

“Mr. McConnell and many of his aides are also eager to get to the business of changing the tax code, which they view as less difficult than health care, and have been working with the White House behind the scenes to get that effort started. For Mr. McConnell, cutting taxes is a much higher priority than health care, which time and President Trump have turned into quicksand for him and his fellow Republicans.

“Just hours after the presentation of the Senate health care bill, Mr. McConnell met with Speaker Paul D. Ryan and White House officials to talk taxes… Mr. McConnell is not fond of bringing bills to the floor that he does not think can pass. Should he be unable to pull together enough support on the health care bill over the next week, it would seem likely at first glance that he would make the dreaded call to the White House to let the president know that he lacked the votes.” New York Times, June 22nd.

But if Trumpcare fails to pass, what happens to the ACA that Trump has seriously sabotaged? What can really happen? It just plain is not pretty, as insurance carriers have been deserting healthcare exchanges in droves based on Trump’s efforts. Can the Republicans fix this mess? And if they cannot get those massive cuts in healthcare, what impact does that have on their tax cutting plan? Stay tuned. Did I say, “not pretty,” I should have said, “downright ugly.”

I’m Peter Dekom, and shifting wealth further to the rich at the expense of everyone else has serious long-term consequences that might eventually become irreversible without… regime change, a truly terrifying prospect.

1 comment:

Anonymous
said...

CBO (Per the NY Times) Analysis of the Proposed Reconciliation Bill:"The bill would reduce the federal deficit by $321 billion over 10 years… The savings could have been even larger, but the bill would repeal most of the tax increases that the Affordable Care Act imposed primarily on the wealthy to help pay for expanded coverage."The budget office projects that by 2026, 49 million people would be uninsured, compared with 28 million people if the current law remained in effect. (The total increase is 22 million due to rounding.)… "The increase in the number of uninsured would be disproportionately larger among older people with lower incomes.Several major changes under the Senate plan would cause fewer people to have insurance.The bill repeals the individual mandate, which requires all Americans to obtain health insurance if they can afford it or else face penalties. The mandate, which many Republicans criticize, was created to keep insurance affordable for those who are older or sick…The largest group to lose health insurance coverage would be people with Medicaid. In 10 years, the C.B.O. projects, there would be 15 million fewer Medicaid enrollees… By putting Medicaid on a budget, the bill saves $772 billion over 10 years….The C.B.O. estimates that average gross premiums would initially rise under the Senate bill, then drop by about 20 percent, compared with what it would be under the current law, in 2026.This would largely be achieved by offering skimpier plans with higher deductibles, and by pricing the old and the sick out of the insurance market."The Senate bill would make financial assistance for premiums less generous than under the current law. That means that average deductibles for the plans would be much higher. For many low- and middle-income Americans who currently receive subsidies, their share of premiums would rise."A man in his sixties making $56K/year can expect a $20K/year premium with vastly higher deductibles and co-pays.

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Peter J. Dekom practices law in Los Angeles and was formerly "of counsel" with Weissmann Wolff Bergman Coleman Grodin & Evall and a partner in the firm of Bloom, Dekom, Hergott and Cook. Mr. Dekom's clients include or have included such Hollywood notables as George Lucas, Paul Haggis, Keenen Ivory Wayans, John Travolta, Ron Howard, Rob Reiner, Andy Davis, Robert Towne and Larry Gordon among many others, as well as corporate clients such as Sears, Roebuck and Co., Pacific Telesis and Japan Victor Corporation (JVC). He has been listed in Forbes among the top 100 lawyers in the United States and in Premiere Magazine as one of the 50 most powerful people in Hollywood .

Mr. Dekom has been a management/marketing consultant, and entrepreneur in the fields of entertainment, Internet, and telecommunications. As a consultant to the state of New Mexico for almost a decade, he was instrumental in creating, writing and implementing legislation to encourage film and television production in the state and supervised the film loan program portion of that incentive structure until the spring of 2011. Mr. Dekom has also provided off-balance sheet, insurance-backed financing for major motion picture studios.

Mr. Dekom served on the board of directors of Imagine Films Entertainment while the company remained publicly traded and was a board member of Will Vinton Studios and Cinebase Software, among others, leaving upon change of ownership. He has also served as a member of the Academy of Television Arts and Sciences and Academy Foundation, Board of Directors, Chairman (now Emeritus) of the American Cinematheque, and on the Advisory Board of the Shanghai International Film Festival. He recently served on the Board of Governors for the America Bar Assn.’s Sports and Entertainment Law Section, where he often authored articles, delivered lectures and continues to be an active participant.

The Beverly Hills Bar Association honored Mr. Dekom as Entertainment Lawyer of the Year in 1994, the Century City Bar Association accorded him the same honor in 2004, and the Family Assistance Program named him Man of the Year in 1992 for his work with the homeless. In 2012, the American Bar Association, through its Forum on Sports and Entertainment Law, honored Mr. Dekom with its highest recognition for entertainment lawyers, the Ed Rubin Service Award. Author of dozens of scholarly articles, Mr. Dekom also is the co-author of Not on My Watch; Hollywood vs. the Future (New Millennium Publishing, 2003) with Peter Sealey and author of Next: Reinventing Media, Marketing and Entertainment (HekaRose Publishing Group 2014). He has served as an adjunct professor in the UCLA Film School, a lecturer (entertainment marketing) at the University of California, Berkeley Haas School of Business as well as being a featured speaker at film festivals, corporations, universities and bar associations all over the world.

Mr. Dekom graduated from Yale in 1968 (BA), and graduated first in his class in 1973 from the UCLA School of Law (JD). He is married to Kelley Choate, an MBA and former art gallery-owner who evolved into a renowned micro-collage artist in her own right. He also has a son, Christopher (b. 1983), who is a Duke University graduate, a Chartered Financial Analyst, a 2013 Darden (UVa) MBA graduate, and is currently an executive with a Los Angeles-based media and entertainment company. Chris' wife, Stephanie (a 2013 George Washington University MD grad), is a neonatal pediatrics 'fellow' at a major Los Angeles hospital